Equity Method Investment

12 Months Ended

Dec. 31, 2021

Equity Method Investments and Joint Ventures [Abstract]

Equity Method InvestmentIn October 2020, the Company announced the launch and $56.0 million Series A financing of Longboard Pharmaceuticals, Inc., or Longboard (formerly known as Arena Neuroscience, Inc.), which was expected to focus on

developing novel central nervous system, or CNS, targeted assets discovered by the Company’s G-protein-coupled receptor, or GPCR, research engine. Longboard was previously a wholly owned subsidiary of Arena. As of the completion of Longboard’s Series A financing in October 2020, the Company’s ownership in Longboard comprised approximately 33.4% of the outstanding shares of capital stock of Longboard. The Company has licensed certain development and worldwide commercialization rights to Longboard and is entitled to receive royalties on potential sales of LP352, LP143 and LP659, in the future. In October 2020, the Company also entered into a separate services agreement with Longboard, pursuant to which it agreed to perform certain research and development services, general and administrative services, management services and other mutually agreed services for Longboard and receive service fees. The Company’s investment is accounted for as an equity method investment, and the investee, Longboard, is considered a related party.

In March 2021, Longboard completed an initial public offering (“IPO”) and the Company’s ownership was diluted to 23.5%. The Company recorded a gain of approximately $13.9 million during the three months ended March 31, 2021 as a result of the offering to account for the related ownership dilution of its equity method investment. The gain was determined based upon the Company’s proportionate share of the increase in the net assets of Longboard from the offering.

The carrying value and ownership percentage of the Company’s equity method investment is as follows, in thousands, except ownership percentages:


		December 31, 2021				December 31, 2020
	Balance Sheet Location	Carrying Value		Ownership %		Carrying Value		Ownership %
Longboard	Other non-current assets	$	19,619	23.1	%	$	12,331	33.4	%

Equity method investment activity included in the Company’s consolidated statements of operations is as follows, in thousands:


	Income Statement Location	Year Ended December 31, 2021		Year Ended December 31, 2020
Equity in losses from Longboard	Other (expense) income, net	$	(6,581)	$	(664)
Gain from Longboard IPO	Gain from Longboard equity method investment	13,869		—
Gain from deconsolidation	Gain from Longboard equity method investment	—		12,955

Accounts receivable due from Longboard related to the service agreement was approximately $0.3 million as of December 31, 2021 and is classified in “Prepaid expenses and other current assets” in the consolidated balance sheets.